New Plan Helps Pay Off Student Loans

So far, more than fifty million Americans have helped finance their college educations with help from federal student loans. As graduates grow nervous about their chances in a volatile job market, federal regulators hope that a new repayment program can ease budget burden. Working in public service jobs or for non-profit agencies can also lead to long term debt forgiveness, allowing government leaders to attract more talented college graduates.

How Income Based Repayment Works
Under previous special payment plans, students could suspend loan payments when faced with sudden illness or job loss. With the new income based repayment plan, government loan officers can base a graduate’s monthly payment on their monthly salary. By making regular, small payments under an IBR agreement, you can maintain your commitment to repaying government loans. If you maintain your loan in good standing and you meet certain criteria, the government may elect to forgive the balance of your loan.

For example, a lawyer working in a not-for-profit organization might earn about $45,000 per year after spending as much as $150,000 on career training. A typical law school graduate would ordinarily face student loan payments as high as $1,700 per month. However, under current guidelines, this student would only be required to make monthly payments of about $360 to pay back her student loan.

Because such a low payment would only cover part of the interest on the initial loan, the debt forgiveness aspect of an IBR plan can reward this student for her community service. After 25 years of regular payments, government regulators erase the remaining principal and interest. As the government wipes away more than a half million dollars in accrued interest, this graduate may choose to keep working or to enjoy a debt-free retirement. Plan participants working in certain government positions may qualify for debt forgiveness even sooner, after a period of just ten years.

How IBR Benefits Students
Income based repayment plans open up new opportunities for current and potential students to make college and career choices without focusing on the burden of hefty loan payments. Working adults in high-pressure industries may dream of stepping down to less stressful jobs that require specific career training. An IBR plan can help buffer the pay cut you may experience when shifting from a senior position in one field to an entry level job in another. If your circumstances change and you find yourself in a high-paying corporate job, your student loan payments should adjust to reflect your new salary.

Income Based Repayment Just One Option for Paying Down Student Loan Debt
IBR plans should become available during the summer of 2009 for graduates holding student loan accounts with the Department of Education or with a select private lender administered by the Federal Family Education Loan Program. Furthermore, debt forgiveness options are available only to students participating in the government’s Direct Loan program. Therefore, to get the maximum benefit from income based repayment options, financial advisors recommend consolidating your loans with the federal government.

The federal government isn’t the only source of assistance for students interested in community service jobs. Many colleges and universities offer special tuition waivers, grants, and other forms of financial aid for students who pledge to work in public interest jobs. Private foundations also raise funds to provide scholarships and stipends for students who plan to work in special niches of law, government, and fine arts. Teachers enjoy student loan forgiveness programs in many states, as do many military personnel. With help from multiple sources, you can enjoy a rewarding career in service to your community without the sacrifice of crushing student loan payments each month.

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COMPLAINT #1 (Office of Inspector General / Department of Education) “Anyone suspecting fraud, waste or abuse involving Department of Education funds or programs should call or write the Inspector General’s Hotline.. OIG Fraud Hotline” ~ ed.gov Sallie Mae was the _only_ financial lender involved in the diploma mill fraud… and now ask Congress for a bail out?? GO TO GOOGLE AND RESEARCH THESE 2 THINGS: 1. Westwood Diploma Mill Scam 2. 60 Minutes Sallie Mae Fraud Students say college misled them Tuesday, February 22, 2005, By BYRON HARRIS / WFAA-TV “The sales pitch said Westwood is accredited; students said that led them to believe the school has the same academic status as well-known colleges and universities. But the sales pitch doesn’t mention the fine print on the back of the contract, which said “Westwood College of Technology makes no guarantee of credit transfer.” In fact, these students found that when they presented their Westwood transcripts to other schools, the reaction was anything but positive.”You can just keep this … because we don’t recognize this institution as a school,” Moers recalled one school’s representative as saying. Westwood is headquartered in Denver, and claims it’s been around for more than 50 years. However, Colorado state incorporation records indicate the current owner began business in 1986. …talk with News 8 about complaints against the school, but when a crew got there for our scheduled interview, two representatives from the home <b>…</b>

Help answer the question about student loan

Payoff student loan or use it as deductable?
My husband and I have around 30K student loan, interest is about 8%.
Right now we are paying monthly payment, sometimes pays extra in the good days, and hoping to pay it off sometime in the next 5-6 years.
But another hand, because student loan could be one of the income tax deductible, so we are not sure if we should keep the student loan as long as it takes and just pay minimum each month.
Which way actually save us money?
Use student loan as deductible each years or pay it off as soon as we can?